Coega's Dedisa station case study for international programme
Case Study: Coega Dedisa Peaking Power Plant’s construction statistics reflect international best practice through impressively low industrial action figures
The Coega Development Corporation, catalysts for championing of socio-economic development in South Africa, has chalked up an excellent rate of low labour disruption in the Coega Industrial Development Zone (IDZ) and particularly in the implementation of the Coega’s mega infrastructure project – the Dedisa Peaking Power Plant – thanks to CDC’s un-parallel effective project stakeholder management and good labour relations as well as international best practice in infrastructure development.
The CDC’s latest labour and economic statistics on the construction and development of the Coega Dedisa Peaking Power Plant, located in Zone 13 of the IDZ, reflect industrial action that is lower than the national average. “Similar projects in Shaka’s Kraal in KZN could learn from the Coega Dedisa Peaking Power Plant construction and Coega IDZ development on how to effectively implement projects of this nature,” said Dr Ayanda Vilakazi, Head of CDC Marketing and Communications.
“Since the inception of Coega projects in 2002, construction projects in the IDZ and Port of Ngqura have generated over 60 million man hours, with 3.2 million of those hours (5%) attributed to the construction of the Dedisa PPP between 2013 and 2015,” said Duncan Grenfell, CDC Head - Recruitment and Placement.
In the same period, more than 2 000 employment opportunities have been created with 70% going to local residents in Nelson Mandela Bay on the Dedisa site. Significant training interventions have also been undertaken, including 700 technical training courses offered to employees from contractors working on the site.
Construction on the Dedisa plant is on track for completion in 2015 Q4, completing the project in 24 months, a significant milestone for such mega projects (R3.5bn development).
The project has benefited from minimal disruptions emanating from labour and industrial actions. Only 1,5% of time was lost due to industrial action at Dedisa - a significant improvement on the national and industry average of 2,5%, a figure provided by the construction industry.
In other places in KZN, where a similar project to Coega Dedisa Peaking Power Plant is currently being implemented, more than 1440 man hours have been lost since the start of the construction of the plant due to labour unrest; and this is likely to reach at least 6000 man hours lost due to on-going industrial action, causing major financial losses and significant project delays.
However, the CDC could utilise its expertise in this disastrous situation to ensure jobs are not lost as a result of poor management of stakeholders and ineffective implementation of labour management practices, in so doing benefiting the country in terms of economic and socio-economic development.
Coega IDZ and Port of Ngqura Construction Labour Time
Coega Dedisa Peaking Power Plant Labour Time(2003 – 2015)
60 million hours
3.2 million hours
% of time lost due to industrial action
Between 2002 and 2015, time lost on construction projects within the IDZ for international and national investors was 0,12% - well below South Africa’s 2,5% average.
According Dr Vilakazi, the CDC achieved this primarily through un-parallel effective project stakeholder management, from which other similar projects in northern KZN province (Shaka’s Kraal) could learn. This included the development of the stakeholder management strategy, community liaison support and the establishment of a social accord to provide support to both investor and contractor.
“In addition to stakeholder relations, the maintaining of labour harmony on the Coega Project is the effect of a holistic approach to labour project management from managing supply to human resources demands. Maintaining compliance to South African labour legislation was done and an employee relations framework was created to ensure labour stability,” adds Dr Vilakazi.
One of the key pillars for CDC’s success is the Zone Labour Agreement (ZLA), the only ZLA in effect in Southern Africa. The ZLA contains agreements negotiated between stakeholders in the South Africa construction industry in 2003. The ZLA has effectively ensured the rights of employees and the interest of employers are maintained while working on the Coega IDZ and Port of Ngqura. Noting that this has not been implemented in other provinces.
“It is by having a proactive labour management framework and approach to dealing with risks in a mega project environment that has been tied and tested across many large projects in Southern Africa and abroad,” added Grenfell.
Consistent application of the labour management framework that contractually binds all parties and provides standards for employment relations that has the long term interest of the development of the IDZ is the key to the success of the model.
“The willingness and commitment of investors, the construction industry, labour unions and the community of Nelson Mandela Bay have demonstrated that labour harmony is possible on large multi-year construction sites.”
The CDC further provides skills training aligned to a national skills framework, and assists clients and investors with contractual risks reviews and labour management systems, included in these is programmes for training of artisans in all the scarce skills sectors.
Recruitment of skilled workforce with experience in the power generation industry proved to be catalytic during the construction phase of the project. In order to boost the skills pool, CDC initiated specific training on power plant construction and operations.
“The Coega Project is reliant on the relationship it has with local education and training institutions such as the Nelson Mandela Metropolitan University (NMMU) and the TVET Colleges in the area. The NMMU supplies the local industry with over 430 qualified engineers and technicians each year that cut across the disciplines to support economic growth in the area,” adds Grenfell.
In addition to maintaining a stable industrial relations climate, Dr Vilakazi said CDC was also committed to ensuring other industries in Nelson Mandela Bay would benefit.
“Additional economic activities have also been created for local suppliers, like quarry material and minor steel works. South African companies also benefitted by providing locally produced ancillary systems of the plant like heating, ventilating and air conditioning systems.”
“As the largest IDZ construction project, strict precautions have consistently ensured safety, health and environmental regulations. Gas turbines at the Dedisa plant will be equipped with water injection type burners to reduce mono-nitrogen oxide emissions generated during the combustion process,” said Sandisiwe Ncemane, CDC Business Development Manager- Energy Projects.
“During operation, plant emissions will be monitored continuously by systems installed on each stack, and air quality monitoring stations to be installed at ground level,” added Ncemane.
The establishment of the plant will provide assistance to the growing industries established in the IDZ. An estimated 1 000 permanent jobs will be created in the area as a result of the supply of electricity to those industries. Local employment and procurement was made in coordination with the CDC as far as possible.
Ncemane added that the power generated and exported to the grid will enhance CDC’s capability as a prime investment location. The Dedisa PPP has black start-capability, on-site fuel and water storage for 45 hours of full load operation. Its current design provides for future combined cycle conversion through the addition of heat recovery steam generators, steam turbines, condensers and auxiliaries if natural gas supply is secured for operations.
Since inception, CDC has built momentum on both conventional and renewable energy projects. Coega’s energy projects include generation projects, based on a range of technologies including gas, wind and solar, with a focus on component manufacturing for renewables and the nuclear energy sector.
Dr Vilakazi said the CDC is seeing growth in the logistics, energy, agro-processing and chemical zones of the Coega IDZ. At present, projects under construction for investors are valued at R2,3 billion.
“Lastly, the Coega IDZ and the Dedisa Peaking Power Plant construction in particular have spearheaded the CDC to becoming one of the best government operated infrastructure implementing agents in Southern Africa. The CDC has and continues to assist government and other local and international organisations to implement complex and mega infrastructure development programmes, thanks to 16 years of CDC’s experience in infrastructure project management through the IDZ.”
“Other organisatons (locally & internationally) currently implementing or planning to implement complex or mega infrastructure programmes could utilise the CDC’s expertise on effective project stakeholder management and labour relations practices as well as the effective implementation of the ZLA, said Dr Ayanda Vilakazi.”
The Dedisa PPP in Coega started commercial operation last week.
Arnaud de Limburg, CEO of Dedisa Peaking Power, commented: “Dedisa has started commercial operation on schedule and I want to sincerely thank everyone who has contributed to this achievement for their efforts and support. We owe our success to a solid partnership, strong support from both local and national Authorities, and highly motivated teams.
"I'm also proud that we have attained our goal with the utmost attention to our economic development objectives. Looking ahead, I am confident that in the frame of South Africa's Gas Master Plan we will be able to convert the Dedisa facility to baseload and combined cycle as envisaged by the Department of Energy.”
Image: MEGA PROJECT: The latest labour and economic statistics on the construction and development of the Dedisa Peaking Power Plant - located in Zone 13 of the Coega Development Corporation (CDC) Industrial Development Zone (IDZ) in Nelson Mandela Bay, Eastern Cape - reflect a lower-than-national average of industrial action.
About Dedisa Peaking Power Plant:
The Dedisa PPP is owned and will be operated independently by the IPP consortium, comprising ENGIE (formerly GDF Suez, France), Mitsui & Co (Japan), Legend Power Solutions (RSA), and the community trust “The Peaker Trust”. The Dedisa open cycle gas turbine (OCGT) plant consists of two V94.2 model gas-oil fuel fired turbines. Once operational, the plant will have capacity to generate 342MW of electricity through open-cycle gas turbines (OCGTs), which represents half of Nelson Mandela Bay’s current power requirement. Dedisa is also building the Avon Peaking Plant in Shakaskraal, KwaZulu Natal, about 45 Km North-East of Durban. The KZN plant is twice the size of the Dedisa PPP in the Coega IDZ and is envisaged to produce 670 megawatts.
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